Source: Asia Pulp & Paper -- Graphic Arts Online, March 2, 2010

WASHINGTON -- The U.S. Department of Commerce released today the preliminary results in its countervailing duty (CVD) investigation of coated paper from China and Indonesia. Asia Pulp & Paper (APP), a major exporter of coated paper from China and Indonesia, expressed disappointment with the initial findings. The coated paper under investigation is typically used for printing multicolored graphics for catalogues, books, magazines, labels and wraps, greeting cards and other items requiring high-quality print graphics. APP remains confident that when the Commerce Department has fully considered all of the facts, the preliminary margins will be reduced or eliminated.

"This is a disappointing preliminary decision," said Terry Hunley, Acting President, APP Americas, "but it is a long process and the Commerce Department is still gathering and analyzing all the facts. At the end of the day we expect a significant improvement in these preliminary subsidy findings, and confirmation again that the U.S. industry has not been injured and is therefore not entitled to any special protection."

This is the second time in as many years that the Commerce Department has conducted an investigation of exports of coated paper produced by APP. It is rare for such cases to be revisited so quickly. The prior investigation was terminated by the U.S. government because APP's imports of coated paper did not harm the U.S. industry. APP expects a similar result in this case.

"This investigation has even less basis than the last one, since the U.S. industry is making more money and has benefited from enormous government subsidies in the form of environmental tax credits, ironically for burning 'black liquor,' a byproduct of the pulp wood making process, to fuel its manufacturing plants. It is hypocritical for U.S. paper makers to accuse us of receiving subsidies when the domestic companies racked up nearly $9 billion in tax credits last year."

In the current case, the preliminary countervailing duty margins applicable to APP product is 12.83 percent on products from China, and 17.48 percent on products from Indonesia. The margin is different from the final results issued in the Commerce Department's prior investigation in 2007, due in part to the addition of newly investigated programs and changes in the Department's methodologies.

APP continues to vigorously contest the case. "The facts are on our side," Hunley said. "This case is unwarranted, and unfairly limiting competition would be un-American. It would hurt printers, publishers and everyone in America who consumes finished coated paper products. We will continue our work to have this case rejected on the merits. This process is like the Super Bowl, you can't predict the final score based on what's happened in the first quarter."

Based on recent requests made by the petitioners, the Department of Commerce's final ruling on CVD is expected to be released in September along with the final ruling on anti-dumping (AD). The last phase of the cases takes place in October or early November, when the U.S. International Trade Commission will determine if the U.S. paper industry has been harmed. Only an affirmative ruling at that time would lead to the imposition of an AD/CVD duty order on the coated paper in question from China and Indonesia.